Tax Simplified - Uganda

29/08/2020

25/07/2020

The constitutional court has not declared S. 15 of the Tax Appeals Tribunal Act unconstitutional.

Court has only section has only tried to restrict it's application.

This is the provision that provides for payment of 30% of tax assessed prior to proceeding before the Tax Appeals Tribunal;

The Supreme Court in *Uganda Projects implementation and management centre v URA SCCA. No.2/2009* ruled that, for anyone to proceed before TAT, they must pay 30% of the tax assessed regardless of the nature of their objection.

The learned Justices of the Constitutional Court sought to restrict this application in *FUELEX v URA

"S15 does not extend to instances where the tax payer contends that. 1. They’re exempted, 2.They have obtained a waiver, 3.They’re not a tax payer in Uganda, or 4.That the assessment in issue is founded upon wrong or non existent law.

In such instances, TAT is required to first make a determination on the question as to whether the objector is in fact a “Tax payer” for purposes of the assessment in question”

Also note that Supreme Court decision is still binding until the Supreme Court itself revises this decision.

25/06/2020

Small businesses are always ignorant of how much tax to pay. Those that are not worry about how to calculate tax payable in a given period. Here is a quick guide to tax payable by small businesses in Uganda.

Note: it always pays to keep records. Keep every invoice, every receipt. Your business benefits from this too.

19/06/2020

Are you a commercial motor vehicle owner? Do you struggle to understand how advance income tax is calculated? There you go..

12/03/2019

HOW MUCH TAX DO YOU PAY?

Most people who are employed know that they pay taxes, however when signing that agreement, we only gloss over the net pay and not the gross pay. It would be surprising to know how much taxes you pay to the government, much more than your NSSF savings

Persons earning between 235,000 to 335,000 10% of your pay ends up in the national coffers

Between 335,000 to 410,000 - 10,000 plus 20% of your gross pay goes to the government

Above 410,000 - 25,000 plus 30% of your gross pay goes to the government

Above 10,000,000 - Almost 40% of your gross pay

Now we can all calculate how much the government takes from us

26/02/2019

HOLDING ONTO AN OUT DATED LOG BOOK

To the left is the old Car log book, to the right is the new electronic log book.

In 2012, Uganda moved from a manual to an electronic motor vehicle system and all car owners were required to validate their old green log books and acquire an e-log book.

Before paying for that car, especially series below UAR, ensure that the seller has a new log book.

For those holding onto the old out dated log books, getting the new log book is simple, fast and easy. Do not wait until you have an urgent transaction as this can become frustrating.

20/02/2019

CAR LOG BOOK TRANSFERS

Is that car log book in your name?

Selling your car, without transferring the log book to the names of the new owner means the car still belongs to you.

When or if that car is used in committing a crime, the police runs to URA first to find out the ownership of the car and you become the first suspect.

Buying a car without transferring the same into your names means the old owner technically still owns the car.

Did you know that in some microfinance institutions, all they need to give someone a loan is a car log book in his or her names?

So you could be driving a car that is security for another person's loan

Do not take the risk. Transferring ownership of a car is just a click button away...

16/02/2019

"An efficient tax system ought to be certain. It needs to be clear as to the amount of tax that needs to be paid, the timing of the payment and the manner of payment. If these are not certain, then every person subject to that tax is put more or less in the power of the tax-gatherer, who can either aggravate the tax upon any obnoxious contributor, or extort, by the terror of such aggravation, some present or perquisites to himself."

Uncertainty leads to corruption and is a far worse evil than inequality in the burden of tax.

Adam Smith

11/02/2019

WHAT DOES FILING A TAX RETURN MEAN?

It means informing the tax man about the performance of your business on any particular tax head.

Simply put, i sold this much or I provided services to this many people, at this price and spent so much.

For example, if you are in whole sale business, you simply state your sales in the period, e.g. I sold 1,000 bags of rice at 100,000 each making sales of 100m and then state your expenses like rent, labour costs, storage costs..etc. This will enable you to come up with your profit and tax payable.

For tax heads like VAT, you simply state your sales and VAT charged on each sale (18%) and remit the 18% to URA.

There is certainly some accounting involved in income tax returns. This includes preparing Balance Sheets and profit and loss accounts.

In general terms, filing a return simply means declaring your business performance to the Tax Authority.

06/02/2019

WHAT YOU NEED TO KNOW ABOUT FILING TAX RETURNS

1) Filing returns is mandatory for all Tax registered persons i.e Any individual or entity that has a TIN.

2) Filing returns is done online in your TIN account. Every TIN has a password that enables the user to log in and apply for various URA services as well as file a return.

3) There are 5 types of returns, Income tax returns, Value Added Tax (VAT) returns, Withholding Tax (WHT) returns, Local Excise Duty (LED) returns and Pay As You Earn (PAYE) returns

4) Some returns are filed monthly like VAT, PAYE, WHT and LED. These are due by the 15th of every month

5) Income tax returns are filed every 6 months usually 30th June and 31st December.

6) There is a penalty of UGX 200,000 per month for late filing of each return. i.e. filing after the due date. EXCEPT WHT and PAYE

7) It is not enough to file, one has to pay the resultant tax after filing. Payment due date follows the return due date

8) Late payment attracts interest on amount due.

9) Where your only source of Income is employment and your Employer files PAYE returns, the obligation to file your return is waived. However if you have other incomes for example a business or rentals, then you have to file a return.

10) NGO's and other exempt organisations are not exempt from filing returns for the tax types they are registered for. They also need to apply for income tax exemption if they do not make profit.

04/02/2019

WHY YOU HAVE A RANDOM TAX ASSESSMENT FROM URA IN YOUR EMAIL (FILING TAX RETURNS)

A number of times, people call me quite irritated, probably bordering on anger, why?

"I found an email from URA issuing me with a tax assessment of UGX 2,000,000. where is this coming from?"

Most times, this is usually followed by statements like

"I have been out of the country for the past two years" OR

"I opened up a company and got a TIN as a bid requirement but that didn't work out and i abandoned the company" OR

"I am employed and have no business" OR

"I got a TIN to buy a car and that was it"

Unfortunately for all these scenarios, it is because we are not aware of the obligations that accrue once we register for taxes. Getting a TIN means one is a tax payer in Uganda until the TIN is deactivated.

The Tax Procedures Code S.16 requires every tax payer to file a return, failure to do so, the commissioner has the right to issue you with an assessment based on an industry average. This is done automatically by the URA system for as long as a return was not filed.

For salaried employees, the employer usually files a PAYE return. In principle, the employer files your return. However, make sure you are registered for a TIN as an employee, otherwise, if you registered as a business person, the assessments will keep coming. (Stay away from middle men, to have accurate details on your TIN)

This also applies to persons who were in business at the time of registering for a TIN but later changed to employment, you will have to amend the source of income details on your TIN, otherwise, the assessments will keep coming.

So FILE YOUR RETURNS TO AVOID ASSESSMENTS, whether you are in business or not. If business is not picking up or you have abandoned it for a while, it is okay to file a NIL return, but do not neglect the duty to file a tax return, for as long as the TIN is still active. And if you have not gone through a deactivation procedure, then the TIN is active.

The duty comes with a penalty if one does not file the return in time.(This is very important)

Remember, filing a return is done online, so being out of the country does not save you.

Next Post, we shall address the details of Filing a return including time periods and penalties.



Tax Education is Key